Her Majesty’s Revenue and Customs (HMRC) figures show that financial institutions’ and property companies’ spending on UK residential assets is on an upward trend.
Increasing interest from institutions in residential property should come as no surprise, because whether looking over the short, medium or long-term, residential has delivered far better returns than the more traditional investment assets of stocks, gilts and commercial property. Over the past ten years the performance of UK residential property has far surpassed commercial property, with a total annualised return of 9.6%, versus 6.9%.
Past performance can of course be no predictor of future performance, but against a backdrop of high occupier demand and a housing supply shortage that shows no immediate signs of abating, the economic fundamentals suggest UK residential property will continue to perform well for many years to come, and in a very uncertain world, expose the investor to less risk than many other asset classes.
The purpose of this guide is not to twist arms, but to inform by illustrating that the UK residential sector provides a greater range of opportunities than perhaps is often perceived, and that there is a growing infrastructure and body of expertise for organisations contemplating residential investment.
The residential sector already encompasses well-established recipients of pension and insurance funds – for example the ground rent and student accommodation sub-sectors, the latter also generating interest from private equity investors. Other parts of the sector, such as assisting home owners, and social housing investment, are only just starting to establish themselves, and sitting in the middle is the market rented sector.
What we have sought to do in this guide is to illustrate the key characteristics of different residential assets, using a market rented portfolio as a comparator to highlight their different facets, performance and risks.
We hope you find this publication informative and helpful.